Saturday, 19 December 2015

2015 jobs scorecard: Bursars, nurses & hearses

2015
scorecard

Each quarter the statistics
bureau releases its Detailed Labour Force series which sheds light on
employment trends by industry, and with the final quarterly now in it is a fine
time of year to review the winners, grinners and sinners from 2015.

The established major weaknesses
in the labour force are well known.

Over the last three decades manufacturing has endured a protracted,
sweeping structural decline that has seen total employment continue to fade
from around 1.1 million to now sit below 850,000.

The high dollar sustained
through the mining boom has eliminated more marginal businesses from the
sector, and although the currency has since depreciated again, many of these
jobs are never coming back. This macro trend is one of several reasons I’ve
been healthily sceptical about the upbeat predictions for the Adelaide property
market over the years, even though housing affordability is demonstrably better
than elsewhere.

Meanwhile, total employment
the mining sector has shrunk by 17
per cent since the May 2012 peak. It is sometimes highlighted by terse commentators
that mining accounts for less than 2 per cent of total employment in the
Australian economy, the implication being that the influence of the industry is
overstated.

While the statistic might be technically accurate, when resources-related
employment and ancillary industries are included, the total decline in investment
and economic activity has been hugely significant.

Happily at least the figures
for construction employment suggest
that most of those laid off from resources construction projects have to date
found gainful employment in the residential construction sector. But with a
record high of more than 182,000 of the houses and units approved in the last
year being back in the capital cities, demand in mining regions is inevitably
crashing back to earth.

In real estate terms, many
mining towns had their boom, and now must suffer the bust, with some former 'hotspots' finding that there are few buyers at any price.

That’s the bad news.

The brighter news is that nationally the
services sector accounts for a considerably greater share of total employment,
and here easier monetary policy is steadily biting, as the chart below
selectively shows.

Good
health!

I’ve written in at least two of my books that investors should consider the healthcare sector for its long
term outperformance potential, but share market returns from the healthcare
index have been beating even my own often lofty expectations, especially when
benchmarked against the lacklustre performance of the wider market.

Although as I charted here
Australia’s long term population pyramid is not projected to be as “top heavy”
as those in some other developed countries over the decades ahead, largely thanks
to our immigration policy, with life expectancies continuing to rise it is
inevitable that the post-retirement age headcount will swell.

Healthcare
and social assistance employment has exploded over the past year
increasing by +142,700, with the sector now accounting for 12.7 per cent of the
workforce, which may go some of the way to explaining the recent record gains
in female employment.

Finance
and insurance employment also jumped by +29,000 over the quarter
to be +41,000 higher over the year, although being someone who moves in finance
professional circles anecdotally bulk of hiring may have been administrative
rather than executive in nature, so wages gains may be muted.

Manufacturing
employment has been flogged again, nosediving by -53,900 over the year.

Yet strong gains in aggregate across
retail and other services sectors kept quarterly employment positive the tune
of a very strong +98,900.

Highest
net gains in a decade

As with most years since the
financial crisis, there has been plenty of banter about a recession this year,
to be brought about by the ongoing falls in the terms of trade.

In truth given the volatility
in the quarterly net exports figures a “technical recession” could happen just
about any time. But the employment data over the past year has been a long way
removed from the trends seen during Australia’s last recession, through which several
hundred thousand jobs were being spat out of the economy.

In fact quite the opposite
dynamic has existed through 2015 with a massive increase in total employment of
+342,600, which is the highest annual result since more than a decade ago in
the quarter ended August 2005.

Yes, I know, the numbers must
be wrong. The numbers are always wrong! But job vacancy surveys have been almost
uniformly positive, so over the near term at least employment growth should
continue, particularly in the largest capital cities.

Sydney leads jobs growth

Over the past 12 months Greater
Sydney employment growth (+106,900) has been enormous, and Greater Melbourne
has followed hard upon (+70,000).

I’ve spent the last four years
lamenting the total dearth of employment gains in regional New South Wales and
Victoria. While hopefully this won’t jinx it, over the last three months
regional NSW is seemingly creating jobs again, although regional Victoria has
remained where it has been for the past half-decade, which is to say, the
doldrums.

The below “holy chart” of
employment shows that Greater Brisbane is also shaping up relatively nicely,
having added +42,700 jobs over the year. Paradoxically, for the inner Brisbane
property market the city’s building boom offers some of its biggest
opportunities (employment growth, multiplier) and its biggest threats
(apartment oversupply, vacancy rates).

The employment figures for Greater
Adelaide have looked tentatively a bit more positive over the past two months,
although automotive industry closures still loom as a likely headwind.

The monthly unemployment rate
figures at the capital city level are somewhat volatile, but Sydney’s reading
of just 4.4 per cent in November is a reminder of the strength of the economy
in the harbour city, while Greater Brisbane also recorded an unemployment rate
of just 5.4 per cent.

Smoothing the unemployment
rate data on a rolling 12 monthly basis shows that Sydney, Melbourne and
Brisbane are in a confirmed downtrend, but unemployment rates have been rising
in Perth and Adelaide.

The
wrap

Overall, 2015 was a big year
for headline jobs gains, but all indications are that plenty of slack remains
in the labour market, and wages growth has remained soft, suggesting
under-employment. Let’s hope for more jobs growth and declining unemployment in
2016.